Is Beautycounter a pyramid scheme? No. We checked extensively. But, you should think twice before giving it your time and effort. Here is why.
This article gives you all you need to know about Beautycounter as an income idea – why you should or should not sign up for it.
If you’re new to the MLM industry, you’ve probably never heard of a company called Beautycounter. And when you did, your instinct was to carry out some basic research on whether the company was legitimate or just another cash grab for opportunistic scammers.
We did the research for you and believe that Beautycounter is not a pyramid scheme based on the information available. This guide takes a more in-depth look at why we came to this conclusion.
Chances are, you’re probably looking for a reliable side income and want a fool-proof gig that can make your wallet just a tiny bit fatter. There are very few businesses that are recession proof and the personal care industry is part of that coveted group.
Beautycounter sells real beauty products to eager clients with a peculiar marketing gimmick that advocates against the use of ‘harmful ingredients’. The company has identified some 1800 ingredients that it has shoehorned into the “Never List”. This conveniently allows them to be the only manufacturer of products that meet the definition of ‘clean beauty products’.
This article was written by Incomepedia after consulting an insider at Beautycounter.
Table of Contents
A Quick Introduction to Beautycounter
Beautycounter is a newcomer to the cosmetic industry and was founded by Gregg Renfrew in 2013. Renfrew’s early slogans for the company were very ambitious and ahead of their time. The goal was to make toxic-free consumer goods that steer clear of harmful chemicals.
‘Never List’ – Differentiator in the beginning
Beautycounter compiled a list of chemicals they described as ‘never list’ that they never include in their products.
This motto is a cornerstone of their business strategy and they take it fairly seriously.
The business started with the release of the film “An Inconvenient Truth”. Gregg Renfrew saw a documentary on environmentalism in early 2006 that convinced her to make environmentally clean products.
After several years of research, Gregg identified that only 30 ingredients were prohibited for use in beauty products by regulators in the US. To put things in perspective, the EU restricts over 1,400 ingredients. Renfrew would later expand this list to 1,500 ingredients.
Renfrew knew that this market for toxic-free products was underserved and founded her company to develop high-performing yet clean skincare products. She also advocated for changing laws that restrict the use of certain harmful ingredients in products so that everyday people can use safe beauty products.
Growth Funding from Carlyle Group
The Carlyle Group, a leading investment fund manager, acquired a majority stake in Beautycounter in 2021 at a relatively high valuation. The Carlyle Group manages assets worth $376 billion under its management and has rapidly expanded.
Its investment shows confidence in Beautycounter and its position to benefit from the growing demand for clean beauty products.
Carlyle’s investment put the company onto the fast-track growth to success.
Beautycounter has since aggressively increased its marketing share by tapping into an omnichannel business model. The company’s blueprint for Clean products has proved to be a major source of success. It also has a consumer-first agenda that allows it to become a leader in the beauty space.
Beautycounter Lineup of Products
Beautycounter has an impressive lineup of products that are doing fairly well in the market. These beauty products can be divided into three categories, each with dedicated products.
- Serums and moisturizers
- Cleansers and toners
- Eye and lip care
- Treatments and masks
- Face oils and sun protection
- Men’s skincare
Bath and Body
- Body wash and scrubs
- Hair care
- Sun protection
- Baby and kids
- Hand Care
- Men’s care
- Makeup removers
In total, Beautycounter claims to have over 150 products with over 75,000 independent consultants and partnerships with hundreds of retailers.
You can tell by the pricing of its products that Beautycounter really banks on their statement of providing ‘clean’ beauty products. They put a premium on safety and toxic-free beauty products.
Call them overpriced with an unfair compensation strategy for associates, but none of these practices make them a pyramid scheme.
How Does Beautycounter Make Money?
Beauty counter taps into two sources of distributors: i) retailers and ii) associates (who they call their ‘independent consultants’). The use of associates classifies Beautycounter as a multi level marketing company. Their biggest source of income is recruiting associates and incentivizing them to recruit even more associates in exchange for commissions.
A major source of independent consultants for Beautycounter are women in their late 30s to mid 50s who have aspirations of becoming entrepreneurs. This isn’t unlike the shady practices of other MLM companies like Young Living that tap into the mom-fluencer market.
But what sets Beautycounter apart from other MLM companies is their emphasis on non-toxic ingredients.
And this is their biggest source of revenue. People are increasingly paranoid about the use of chemicals in their products and seek ‘all natural’ alternatives. Beautycounter has set itself to fit into this narrative of providing toxic-free products that allow people to live a safe, disease-free lifestyle.
How Can I Join Beautycounter?
Joining Beautycounter is as easy as visiting their official website and signing up to become a partner.
But just like any other MLM business, you will be asked to purchase their starter kits. The good news is that you will receive training to find effective ways of selling these products and recruiting more people to earn commission and bonuses.
The starter kit has further options that include:
- Flawless in Five worth $135
- Counter + Booster worth $158
- Skin Care Basics $290
- Skin Care Best Sellers worth $545
- Deluxe Skin Care worth $730
In this sense, there are two ways you can make money online by joining Beautycounter:
- Selling beauty products for a sales commission
- Getting more people to joint heir network and earn bonuses
Beautycounter has a compensation structure that favors individuals at the top of the hierarchy, with profits trickling down to those at the bottom of the food chain. In other words, the directors of the organization will, by design, receive the vast majority of these profits.
Just like a game of Blackjack, where the dealer always wins, the directors of the MLM always win.
The business model is profitable for the directors regardless of how much effort (if any) they put into their word. The more you recruit and sell, the more money is funneled to the top while a small percentage is shared with ‘consultants’.
But by no means is this a ‘scam’. Beautycounter has a well-thought out and elaborate compensation plan that allows consultants to make money in various ways.
The Beautycounter Compensation Plan
Beautycounter associates can make money using the following pathways
- Retail commissions from sales (by selling company products)
- Personal sales bonus by reaching sales milestones
- Commission from the sales of your recruits
- Frontline Business Builder Bonus (for reaching higher ranks within the company)
The enrollment kit costs $98 and includes products, sales materials, and a personal Beautycounter website for one year. Consultants must renew their membership every year by paying a $50 annual fee. This will provide members with access to the company’s “Behind the Counter Consultant” portal and ecommerce website to accept customer orders.
The MLM hierarchy within Beauty counter is setup as follows:
- Consultant (average earnings of $71))
- Senior Consultant
- Senior Manager
- Senior Director
- Executive Director
- Managing Director (average earnings of $25,000+)
As you can tell from the above hierarchy, consultants have their work cut out for them. However, if you can make it to the very top, you are sitting in at a cushy $25,000 average annual income. These numbers are courtesy of the public earnings disclosure by Beautycounter.
Getting promoted to the position of Managing Director typically requires 31 months. The exact timeline will differ depending on the experience levels of the specific consultant. Indeed, some people will never reach the coveted title of Managing Director.
Others will drop out very early on after realizing the grueling work hours expected of consultants.
The Success and Failure Ratio of Beautycounter
The failure rate as a consultant at Beautycounter is unprecedented. A cursory look at their Income Disclosure Statement here shows the following numbers:
- A whopping 25% of consultants had earned no commissions
- 35% of consultants earned just north of $500
- 22% of consultants earned over $1,000
- 1% of consultants made more than $30,0000
- The median earning for the top 1% of consultants was over $50,000
They had a total of 74,472 consultants in the US.
If we were to discard the numbers $500 and $1000 earned by the top 57% of consultants, we come to a gruesome statistic: nearly 60,000 consultants will earn next to nothing in their careers.
Meanwhile, Beautycounter will earn $3 million guaranteed income from their consultants based on renewal fees alone. Moreover, in order to maintain active status, consultants should accumulate 1,200 QV every six months. Personal orders as well as sales from Clients and Members are included in this figure.
With all the numbers laid bare for you to see – do you think that Beautycounter is worth joining? Is the juice really worth the squeeze?
Statistically speaking, most Beautycounter consultants would be lucky just to breakeven and recoup the costs of joining Beautycounter, much less making any revenue.
Unless you plan on staying committed to Beautycounter for the long haul with the hopes of becoming a Director, we don’t recommend joining. Beautycounter’s income disclosure statement is a grim reminder that most consultants will not be making any money at all.
It is also worth noting that less than 41% of their distributors are active.
Advantages of Joining Beautycounter
A Recession-proof Industry
The beauty industry has shown itself to be timeless and recession proof by providing a safety net to stakeholders from inflation and economic collapse. If you can do well with Beautycounter, you will have a reliable source of revenue. The only problem is that you have to hustle long enough to make it to the rank of Director.
In a market saturated with beauty products, Beautycounter has been able to differentiate itself by offering safe, non-toxic products. Their unique selling point (USP) is to provide customers with clean yet quality Beautycounter products. But we did find a few discrepancies with this statement.
For one, their products are not 100% free of chemicals. Their products also make use of petrochemicals. However, Beautycounter claims that they avoid petrochemicals that have been linked to health problems such as propylene glycol, polyethylene glycol, and toluene, among others.
They also use preservatives to increase the shelf life of their products. The company maintains that none of the preservatives or petrochemicals are used from their “Never List”. The preservatives that do make the cut are only utilized in low concentrations.
A major benefit of working with Beautycounter is that they don’t have an auto-ship system. In other words, consultants are not required to maintain an inventory of Beautycounter products. Customers can easily place their orders online and have their products delivered to them from the nearest warehouse.
Has a Great Marketing Team
Beautycounter has a great marketing team that has done a fairly good job of molding a favorable public perception. A Bloomberg article suggests that Beautycounter is worth $1 billion after it was acquired by the Carlyle Group.
Backed by Celebrities
There are many celebrities who claim to use Beautycounter products. Some of the biggest names include Gwyneth Paltrow, Olivia Wilde and, Jessica Alba. We recommend the reader to take their testimonials with a grain of salt. You never know the real reason why an influencer is endorsing a product.
In any case, endorsements from celebrities (paid or otherwise) indicate impressive penetration in the market.
You Can Make Some Good Money
While it is difficult to make money with Beautycounter, if you just utilize the correct strategy, you can make bank as its beauty consultant. The trick is to have good communication skills and being a go-getter.
For this season, we recommend building your own audience on social media by making good content videos.
This would allow you to become a more efficient consultant by leveraging your influence to grow your network of recruits. It would be easy to recruit people into the company and work your way up to the position of director.
Disadvantages of Joining Beautycounter
Now to list their disadvantages, and there are many to speak of, unfortunately.
Most Consultants Don’t Make Money
As indicated by the numbers above, most consultants will not make any money with Beautycounter. In fact, they will not break even either and drop out of the company due to sheer frustration. The income statement of the company has shown consistently over the course of several years that most consultants make zero income.
We do admire Beautycounter for its commitment to honesty and transparency in this regard by openly admitting that most consultants will make a loss.
You are better off working a full-time job if you need a guaranteed income or starting your own company.
The Products are Overpriced
The network marketing execs at Beautycounter have an overinflated opinion about their products and advertise massive costs that most budget-conscious buyers will not entertain. Retail price for a simple product, like a concealer, for example, starts at a whopping $34.
Meanwhile, their competitors sell concealers for a fraction of the price. Put yourself in your target audience’s shoes: will you buy a concealer that costs $30 or $5?
Toxic-free beauty products are alluring for most consumers, but not worth $30 for a concealer.
Requires Commitment to Recruitment
Did we mention that Beautycounter makes $3 million from consultant renewal fees alone? What incentive would a company have to make quality products when they are making bank from doing absolutely nothing?
This also explains why Beautycounter stresses their consultants to recruit more people into their network. Their efforts to increase Beautycounter consultant numbers reek of desperation and a desire to milk their cash cows for everything they’ve got.
It’s Very Competitive
The beauty industry is a matured industry. Your customer are used to buying beauty products from many other established brands.
In fact, most people would steer clear of Beautycounter after hearing of their price tags. Some consumers might buy a product just to see what’s so unique about it, but they will fall back on other brands for cheaper products.
Climbing up the Rank Requires Patience, Time, and Money
This is a major reason why we believe Beautycounter is not suitable for beginners. You have to keep purchasing products and recruiting new members in order to maintain active status in the company.
Having to sell a certain number of products every six months just to stay active is grueling for most beginners.
Here’s the secret though: no one expects consultants to sell this many products, they expect you to buy them yourself. As long as the company is making a net profit off of the consultant, it doesn’t matter what they do with the product.
Feels Like a Cult
Like most multi level marketing companies, Beautycounter operates a lot like a cult. We’re not saying that the top brass engages in predatory behavior, but those rising up the ranks may be more likely to prey on the ambitions of their next door neighbor or family friend.
They reframe any losses as ‘investments’ and blame the failures on consultants for lack of hard work or competence. In other words, they have a convenient system of shifting blame from themselves to their consultants.
Online Review for Beautycounter
A cursory look at Beautycounter shows on various websites shows a mix of negative and positive reviews. Starting with Trustpilot, we found that Beautycounter has only 8 reviews with 3.1/5 stars.
This indicates that the company hasn’t had enough engagement with clients to warrant a strong response online (positive or negative).
They have only 2.3/5 ratings on Consumer Affairs, which indicates an overall trend towards a negative public perception of the company.
Beautycounter has a decent 3.5/5 rating on Glassdoor, which indicates that they are fairly popular among their employees and consultants alike.
Their Better Business Bureau rating is extremely concerning with a D- rating and just 1/5 stars from 9 customer reviews.
On average, we believe that Beautycounter has more negative reviews than positive ones. We like to take Trustpilot reviews with a grain of salt because of how easy it is to manipulate user reviews on the site.
A major source of concern is the quality of their products. Customers complain that the sunscreens do not have any efficiency. Their fragrances induce headaches. The lipstick can dry out the lips. Users have also complained that sunscreen lotions do little to prevent sunburns even after hours of application.
Customers who initiate refunds have allegedly had bad experiences. They were forced to initiate refunds from their banks because the company refused to take their complaints seriously.
To top it all, the average earnings suggest that it is not a good MLM company to work at, at least for beginners. For the money spent, most Beautycounter consultants will not break even.
Is Beautycounter a Pyramid Scheme?
They sell real products. They do maintain a sprawling network of consultants throughout North America (US and Canada) to help them distribute their products, but this does not make them a pyramid scheme.
Beautycounter also provides plenty of options to consultants for making real money.
The only real problem we have with the MLM company is that climbing up the consultant hierarchy is paved with difficulty.
- Income disclosure: https://www.beautycounter.com/ids
- Acquired by Carlyle Group: https://www.carlyle.com/media-room/news-release-archive/beautycounter-industry-leading-clean-beauty-brand-partners-carlyle
- Bloomberg coverage: https://www.bloomberg.com/news/articles/2021-06-16/beautycounter-worth-1-billion-after-carlyle-deal-ceo-sees-recovery-in-makeup
- Trustpilot rating: https://www.trustpilot.com/review/beautycounter.com
- Consumer Affairs rating: https://www.trustpilot.com/review/beautycounter.com
- Glassdoor rating: https://www.glassdoor.com/Reviews/Beautycounter-Reviews-E923217.htm
- BBB rating: https://www.bbb.org/us/ca/santa-monica/profile/cosmetics-sales/beautycounter-1216-418891
- The Never List: https://assets.ctfassets.net/ylsk4zpp53wa/4TJntLjnZRWBHs4uPMsDmE/cc9d9bff21d08b2adc32e7ae195996ec/20200120_NL-forConsultants.pdf